Factoring the value of nature into governance and corporate decision-making is not an easy task, but governments and businesses are starting to recognize the importance of natural capital accounting. According to the Natural Capital Coalition, 68 countries are looking to produce natural capital accounts, while 10 percent of WBCSD member companies mention the Natural Capital Protocol framework in their sustainability reporting.
But there is still a long way to go. Over the past two decades, 109 out of 140 major nations have shown a downward trend in their natural capital, according to the UN Environment Programme’s ***Inclusive Wealth Report***. Forest resources are declining in 85 countries, while renewable resources are dwindling in more than 100. And that’s not all. The rate of species extinction is also threatening the fundamental integrity of ecosystems.
“We are losing species at an alarming rate,” says Inger Andersen, director general of the International Union for Conservation of Nature (IUCN). “We cannot afford to see this horrendously falling level on species loss.”
Speaking at the World Forum on Natural Capital in Edinburgh, Scotland this week, Andersen said urgent investment is required if such trends are to be reversed and pointed to a $300 billion shortfall per year for natural capital programmes. This funding gap, she added, was what is needed “to sustain our very existence on this planet.”
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According to Andersen, $300 billion represents just 0.1 percent of global wealth – it’s also five times less than what is spent each year on arms and weapons.
“We’re getting better at making the arguments to investors for investment in natural capital … but there is a long way to go. Nature really does work for us; the question is whether we work for nature.”
Getting decision-makers to recognize that natural capital accounting is not just about protecting the environment or biodiversity for its own sake, but about ensuring the long-term survival of countries and businesses, remains an ongoing challenge. Better measurement is required, and a lack of data remains a real challenge.
In fact, as Andrew Mitchell, co-founder of the Natural Capital Finance Alliance, asserted: “The data is unremittingly dreadful.” He told conference delegates that he started out hugging orangutans, but soon realized he couldn’t save them that way – he now hugs Bloomberg financial data terminals. “If you look at a Bloomberg terminal, there is hardly any data there on natural capital. We need to get at the investors, the banks, because they move the money around the world.”
Mitchell cautioned that any focus on money must also be considered within the wider context. In the global north, for example, he said the language of natural capital is the language of money, but in the global south it is the language of poverty. Any degradation in natural capital disproportionately affects the poorest, so the challenge is to get money flowing to support local populations who rely on, and protect, natural resources. “A lot of poor people use natural capital as a means to survive, so we must bear that in mind.”
Most speakers agreed that more data innovation was required, and that artificial intelligence (AI) and machine learning could play a key role here. Michelle Lapinski, formerly of the Natural Capital Coalition Steering Group and now VP of the Earth Genome– an environmental data tech startup – said that AI had the potential to solve some of the world’s biggest environmental and biodiversity challenges by addressing data gaps at scale.
She pointed to Microsoft’s AI for Earth programme, which has three projects underway. One enables land-cover mapping to aid precision conservation; another aims to enable smart agriculture through sensors, drones, data and broadband connectivity; while the third tests the viability of smart mosquito traps to remotely track and monitor species health.
The latter, Project Premonition, aims to detect pathogens before they cause outbreaks by turning mosquitoes into devices that collect data from animals in the environment. Each mosquito bite can collect a few microliters of blood, which contains genetic information about the animal that was bitten and the pathogens circulating in that animal.
Jonathan Hughes, CEO of the Scottish Wildlife Trust, said that more must be done to leverage technology, knowledge and data – this, he added, would introduce an element of transparency and competition that could help mainstream natural capital issues. Both he and Andersen emphasized that AI now has to be part of the conservation solution due to its powerful transformative potential. “We haven’t even scratched the surface with [AI],” Andersen said.
Hughes also touched on what he termed “ecovation” – one example of this could be broadening the circular economy agenda to incorporate wider thinking on natural capital, so considering not just manufactured material flows, but natural flows, as well. He said this could also open up new opportunities for cross-sector collaboration.